Equities continue to trade mixed and are struggling to find a direction. Dow is stuck around 34000 and DAX hovers above 15200. Nikkei is stable within its 28000-31000 range. Shanghai can fall within its 3350-3500 range. Sensex and Nifty have come up towards the upper end of their 47000-49000 and 14150-14700 range and need to see if they can break this range on the upside or not today.
Dow (33984.93, +3.36, +0.01%) is stuck around 34000. We repeat that a strong follow-through rise above 34000 is necessarily needed to move up to 35000. Important support is at 33500. A break below it will reduce the chances of seeing 35000 on the upside. A subsequent fall below 33000 will then turn the outlook bearish for seeing 32000-31000 on the downside.
DAX (15249.27, ?47.07, -0.31%) remains stable above 15200 and continues to lack momentum. We expect 15500 and 15700 to cap the upside from here. DAX is likely to break below 15000 and fall to 14500-14000 eventually in the coming weeks.
Nikkei (29105.88, +113.99, +0.39%) remains stable above 29000. Nikkei is broadly trading in the range of 28500-30500 (narrow) or 28000-31000 (broad). Within this range, while above 29000, a rise to 30000-30500 is possible in the near-term.
Shanghai (3448.02, +5.41, +0.16%) is getting support near 3425 and is attempting to bounce. This could be short-lived. We expect Shanghai to fall to the lower end of its 3350-3500 range in the coming days.
Nifty (14653.05, +168.05, +1.16%) and Sensex (48944.14, +557.63, +1.15%) have come closer to the upper end of their respective range of 14150-14700 and 47000-49000. We expect this range to hold and keep the broader bearish view intact. As such Nifty and Sensex can reverse lower from 14700 and 49000 respectively. This view will get negated if the indices manage to break above 14700 (Nifty) and 49000 (Sensex) decisively. In that case a further rise to 15000-15150 (Nifty) and 50000-51000 (Sensex) is possible.
OPEC+ cancelled the meeting scheduled for today and have announced that it is to continue tapering of oil production with an increase of 350.000 b/d and an additional 350,000 b/d by Saudi Arabia. Crude prices have risen slightly but overall remain ranged within the narrow 68-64 region in Brent and 65-60 region in WTI. Gold and Silver have dipped slightly and may continue to trade lower for a few sessions before a sharp bounce is seen. Copper has declined sharply but while above 4.30/40, there is still scope for a bounce back towards 4.60 in the medium term.
Brent (66.33) and WTI (62.86) have risen slightly and could remain within the range of 70/68-64 and 67/65-60 respectively. While Brent holds above 65, it has scope for a rise to 70. Similarly, while WTI trades above 60, there is scope for a rise to 65-67.
Gold (1771.80 looks stable after falling for the last few sessions. It is important for the price to remain above 1760 to keep alive hopes for a bounce back to 1800-1820 in the medium term.
Silver (26.10) has dipped a bit and could test 26.0-25.75 before again attempting to bounce back.
Copper (4.4360) has dipped from levels seen yesterday and the fall could be a short corrective one before resuming the upward rally towards 4.60 in the medium term. Immediate support can be seen in the 4.40/30 region.
Dollar Index looks stable while Euro may trade below 1.21 for sometime. EURJPY has risen sharply and if it manages to sustain above 131, we may look for fresh targets of 132-135 in the longer run. Pound and Aussie look bearish towards 1.38-1.37 and 0.77-0.7680 in the near term. USDCNY looks ranged within 6.48-6.50 for now while USDJPY has risen well and needs to sustain below 109 to fall back towards 107; else a rise to 109.75 cannot be ruled out. USDINR may hold within 74.40-74.80 today. A break below 74.40, if seen may take it down to 74.25. Resistances are seen at 74.85 and 75.10.
Dollar Index (90.99) holds stable and is likely to rise to 91.30/50 in the near term before again falling back towards 90.50 or lower. Note that while above 9050, we may expect a ranged movement between 90.50-91.50 for some time.
Euro (1.2078) has risen slightly but while below 1.21, there could be a short corrective dip towards 1.2048 before it attempts a bounce back to higher levels.
EURJPY (131.50) has finally rise breaking above the 129-131 range and signals initial signs of a sharp rally towards 132-135 in the longer run. Watch if the cross manages to sustain above 131 in order to continue moving up.
Dollar-Yen (108.88) has bounced back well. It should face rejection from 109 I order to resume its fall towards 107 or lower. Failure to face rejection from 109 will take it higher towards 109.75 again in the medium term.
Aussie (0.7739) has dipped and may continue to fall towards 0.77-0.7680 in the near term before bouncing back from there again. Immediate view is bearish.
Pound (1.3875) looks stable just now. It is likely to hold below 1.40 and may fall towards 1.38-1.37 eventually. View is bearish while below 1.40.
USDCNY (6.4874) is ranged just now. The pair has scope for a rise towards 6.50/52 while downside could be limited to 6.46 in the near term.
USDINR (74.6550) bounced back after testing 74.50 yesterday. While below 74.70, there is scope for a test of 74.40. Resistances are seen at 74.85 and 75.10 respectively. We may look for a range of 74.40-74.70/80 to hold for the day. Only a break below 74.40, if seen will trigger a fall towards 74.25. Watch price action at 74.40.
The US Treasury yields have risen back sharply across tenors ahead of the US Federal Reserve meeting tonight. The crucial supports have held very well and keep the overall uptrend intact. It will have to be seen if the outcome of the Fed meeting provides a fresh trigger for the yields to move up further from here. The German Yields continue to trade stable and are keeping the bullish view intact. The 10Yr GoI has bounced but can face resistance ahead and fall-back again to keep the overall bearish view intact.
The US 2Yr (0.18%) Treasury yield remains stable while the 5Yr (0.88%), 10Yr (1.62%) and 30Yr (2.29%) have risen sharply. The support 1.5% (10Yr) and 2.2% (30Yr) seems to be holding well. As mentioned earlier, while above these supports, the uptrend will remain intact and the yields can rise back to 1.8% (10Yr) and 2.5% (30Yr) in the coming weeks. The danger of breaking these supports and falling to 1.2% (10Yr) and 2% (30Yr) that we were cautioning over the last few days stands reduced now.
The German 2Yr (-0.70%), 5Yr (-0.60), 10Yr (-0.25%) and the 30Yr (0.29%) yields continue to remain higher and stable. We retain our bullish view of seeing a break above -0.25% (10Yr) and 0.30% (30Yr) and a rise to -0.20%/-0.15% (10Yr) and 0.35% (30Yr) in the coming weeks. Thereafter the yields can fall back. To negate the above mentioned rise, the yields will have to fall below -0.35% (10Yr) and 0.20% (30Yr).
The 10Yr GoI (6.0544%) has bounced yesterday but might face resistance at 6.08% and fall back again. Our bearish view remains intact to test 6% initially and then 5.90% eventually in the coming weeks.
1:30 7:00 AU CPI
…Expected0.9% …Previous0.9% …Actual0.6%
18:00 23:30 US FOMC Meeting
…Expected< 0.25 ...Previous< 0.25 -
Data Yesterday:
—————
3:00 8:30 BOJ Meeting
…Expected-0.10% …Previous-0.10% …Actual-0.10%
13:00 18:30 US Case Schiller
Expn16.93% …Expected11.8% …Previous11.1% …Actual11.1%
14:00 19:30 US Cons Conf
Expn111.63 …Expected112.0 …Previous109.7 …Actual121.7
